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United States v. Memar

United States District Court, N.D. Illinois, Eastern Division

September 11, 2017

OMEED MEMAR, Defendant.



         On June 11, 2015, a grand jury indicted Defendant Omeed Memar (“Dr. Memar”) on eight counts of health care fraud and eight counts of making false statements relating to health care matters. The indictment alleged that, between 2007 and 2013, Dr. Memar and his practice submitted claims for payment to various insurance companies that fraudulently presented cosmetic dermatological laser treatments as medically necessary destruction of pre-cancerous skin lesions. The case went to trial, and a jury convicted Dr. Memar on all counts. Now before the Court is Defendant's Motion for Judgment Notwithstanding the Verdict or, in the Alternative, a New Trial [ECF No. 60]. For the reasons stated herein, Defendant's Motion is denied.

         I. BACKGROUND

         Dr. Memar is a dermatologist who runs the Academic Dermatology & Skin Cancer Institute located in Chicago, Illinois. The only doctor on staff at the Institute, Dr. Memar treats patients who suffer from a variety of skin conditions, including actinic keratosis (“AK”), a pre-cancerous skin condition resulting from prolonged sun exposure and typified by the presence of red, scaly plaques. AK is much more common in older patients. Widely accepted methods for treating AK lesions include freezing them with liquid nitrogen; applying various gels and creams to the lesions; and employing photodynamic therapy (“PDT”), which involves applying a harsh acidic agent such as aminolevulinic acid (known as ALA or Levulan) to the affected area before activating it with an Intense Pulse Light (“IPL”) device. AK lesions can be persistent or sporadic, fixed or transient, and dermatologists occasionally disagree on whether a particular skin anomaly is an AK lesion. Physicians who diagnose a patient with AK lesions use the diagnosis code 702.0 and, regardless of the treatment modality employed, they bill insurance companies using a series of codes corresponding to the number of AK lesions they attempt to destroy. As relevant, the 17004 code signifies to insurance companies that the physician or his medical assistant attempted to destroy fifteen (15) or more AK lesions on the patient. Of the available billing codes for destruction of AK lesions, the 17004 code garners the maximum insurance reimbursement.

         For the eight patients referenced in the indictment, Dr. Memar initially examined their faces, recorded on their patient chart (or “secondary encounter form”) a written diagnosis of 15 or more AK lesions, and marked on the form's face diagram the approximate location of the purported lesions. Dr. Memar then prescribed a series of treatments with his IPL device alone - that is, without any of the acids that in PDT are applied to the skin for activation with the IPL device - sometimes informing the patient that he or she had some spots to be taken care of but rarely (if ever) using the words “actinic keratosis” or “pre-cancerous.” Five of the eight patients referenced in the indictment were in their 20s or 30s when this occurred. None of the eight recalled Dr. Memar at this time proposing or suggesting other treatment modalities known to treat AK efficaciously - such as, for example, PDT, chemical peels, or liquid nitrogen.

         Once Dr. Memar prescribed an “IPL alone” treatment series, the patient typically signed a consent form stating that he or she was choosing to “try” the IPL treatment for “Photorejuvenation” and understood that there were “other options for cosmetic skin treatment that are available.” (See, e.g., Trial Tr. at 152-53.) Evidence adduced by Dr. Memar tended to show that these consent forms were issued by the manufacturer and then reprinted on the letterhead of his clinic, and that some patients (not at issue in the case) with biopsy-confirmed AK signed the form. When a patient returned to the office for his or her IPL treatments, Dr. Memar generally did not see them; instead, he instructed his medical assistants to copy verbatim the diagnosis and diagram he made in the patient's initial record into the notes and diagram corresponding to that day's session. One of his medical assistants would then administer the IPL treatment without counting up the patient's lesions at the diagrammed locations.

         For each patient at issue in the indictment, Dr. Memar ultimately billed his or her insurer for multiple IPL treatments under the 17004 code (representing the attempted destruction of 15 or more AK lesions). It was the patient's responsibility to continue with the treatment regimen and make appointments for the next IPL application; he or she could discontinue treatments at any time. When Blue Cross Blue Shield (“Blue Cross”) informed Dr. Memar in January 2013 that it would no longer reimburse for treatments of AK lesions with IPL alone because it considered this a cosmetic procedure, Dr. Memar did not follow up with the eight patients at issue to suggest new treatment options. To the extent any of them received a phone call from Dr. Memar's office after Blue Cross confronted him, such calls merely conveyed that IPL treatments would no longer be covered by insurance.

         In its case-in-chief, the Government put on the witness stand each of the eight patients referenced in the indictment. First was Patient JJ, who testified that she was originally referred to Dr. Memar for treatment of what she understood to be a cosmetic condition - melasma. Although she could not identify Dr. Memar in the courtroom, she testified that she visited his office between February 2008 and November 2011 for a series of IPL treatments that Dr. Memar prescribed. For each such visit to his office, Patient JJ's files indicated a diagnosis of 25 scaly plaques or 25 AK lesions. (She also visited Dr. Memar's office for what she characterized as cheap Botox injections.) The Government offered a picture of Patient JJ from January 2007 in which her face appeared free and clear of any red bumps or plaques. Independently, Patient JJ saw a dermatologist, Dr. Neha Robinson, on seven dates interspersed between the dates she went to Dr. Memar. On each visit, Dr. Robinson performed a facial examination of Patient JJ; on no occasion did she diagnose Patient JJ with AK lesions or 25 scaly plaques. In fact, two weeks before Patient JJ received an IPL treatment at Dr. Memar's office in December 2010, Dr. Robinson examined her face and diagnosed no AK lesions. At one point, Dr. Robinson did diagnose Patient JJ with perioral dermatitis - a red facial rash. All told, Dr. Memar billed Patient JJ's insurer for 11 “IPL alone” treatments as the destruction of 15 or more AK lesions, including the December 2010 treatment and chart underlying Counts III and XI.

         The Government also called Patient PK, who as a 36 year old was referred to Dr. Memar for acne treatment by a physician named Dr. Oosterbaan. On November 10, 2008, Dr. Memar's office sent a letter to Dr. Oosterbaan's office indicating that her diagnosis was indeed acne. Charts admitted at trial showed that Dr. Memar examined Patient PK multiple times between IPL treatments but did not include an AK diagnosis in his charts for those visits, mentioning only acne in some charts. Nevertheless, Dr. Memar billed Patient PK's insurer for 25 “IPL alone” treatments as the destruction of 15 or more AK lesions from November 2008 through January 2013, including the May 2011 treatment and chart forming the basis of Counts IV and XII.

         Patient MM was 29 years old when she went to Dr. Memar in March 2009 concerned about the cosmetic appearance of certain redness and scarring she had on her face. She did not recall having dozens of red, scaly lesions on her face. Introduced into evidence was a headshot photo of her taken on March 16, 2009, showing what appeared to be a face free and clear of any red blotches or bumps. On cross-examination, Patient MM admitted that she was unsure what “scaly” patches were and that she had been wearing makeup in the photograph. The day after the photograph was taken, on March 17, 2009, she saw Dr. Memar. Patient MM testified that the two of them “discussed my problem, how I didn't like how it looked, and he suggested IPL” to “help aesthetically how it looked” and “help sort of the redness . . . skin texture, evenness.” (Trial Tr. at 265.) Dr. Memar recorded in Patient MM's chart a diagnosis of 25 AK lesions, drew on the face diagram in her file lines and dots to correspond with these purported lesions, and proposed a series of “IPL alone” treatments to destroy them. From March 2009 through February 2011, Dr. Memar billed Patient MM's insurer for 13 such treatments as the destruction of 15 or more AK lesions, including the November 2010 treatment and chart underlying Counts II and X.

         Unique among the eight patients referenced in the indictment, Patient KC first went to Dr. Memar for what she characterized as a medical need: She had recently gotten sunburned on vacation. (Patient KC also admitted to tanning in salons.) At the time of her first visit in April 2010, Patient KC was 30 years old. She testified that her skin during that timeframe was smooth, not rough, and not scaly. She recalled Dr. Memar telling her that she had sun damage and prescribing a series of IPL treatments for the damage. Patient KC testified that she ultimately ceased getting IPL treatments from Dr. Memar because she felt that they were ineffectual. From April 2010 to August 2010, Dr. Memar billed Patient KC's insurer for five such treatments as the destruction of 15 or more AK lesions, including the August 2010 treatment and chart forming the basis of Counts I and IX.

         The Government also called Patient MR to the stand. As he told it, he went to Dr. Memar for cosmetic treatment of his rosacea and broken capillaries - conditions he claimed to have had his entire life. In May 2010 when Patient MR was 46 years old, Dr. Memar recorded in his patient chart a diagnosis of rosacea and 15 AK lesions, prescribed a series of IPL treatments, and made some markings on the face diagram in the chart indicating the locations of the purported lesions. Patient MR understood that the IPL treatments would “maybe control the nodules that are part of the condition of rosacea maybe a little bit . . . to control the redness that rosacea causes, right, and to help control the blood vessels in my nose as well as to help break them up so that they get reabsorbed by the body.” (Trial Tr. at 343.) From May 2010 through January 2013, Dr. Memar billed Patient MR's insurer for 23 such treatments as the destruction of 15 or more AK lesions, including the December 2011 treatment and chart underlying Counts V and XIII.

         Patient HL's testimony was somewhat unique in that only she claimed to have familiarity with actinic keratosis; her father had been diagnosed with a single AK lesion on his lip, and she knew the term as a result. Patient HL was 35 years old in October 2009 when Dr. Memar first recorded in her patient file a diagnosis of 15 facial AK lesions. She testified that she did not have the telltale signs of AK lesions on her face at the time, and that her vanity guaranteed that she would have remembered if she had red, scaly plaques all over her face. On cross-examination, she admitted to using tanning salons and experiencing sunburns in the past. In contrast to what happened with Patient PK, Dr. Memar sent a note to Patient HL's referring physician indicating that he was treating her AK lesions with the IPL machine. At one point, Patient HL developed one biopsy-confirmed “lichenoid keratosis” lesion. All told, Dr. Memar billed 14 “IPL alone” treatments as the destruction of 15 or more AK lesions to Patient HL's insurer from October 2009 through February 2012, including the January 2012 treatment and chart underlying Counts VI and XIV.

         The oldest patient at issue in the indictment, Patient KS, was 52 years old when she went to Dr. Memar with concerns about a single growth on her face. Although another dermatologist had assured her that it was benign, Dr. Memar diagnosed it as cancerous and excised it. After February and March 2012 follow-up appointments in which none of her patient files indicate the presence of AK lesions, Patient KS returned on March 8, 2012 for another follow-up appointment. Her chart for that day contains the first mention of “AK x 15.” The patient charts corresponding to her next two visits on March 12, 2012 and April 7, 2012 also contained notes that Patient KS had “15 scaly plaques on her face” and that she received “IPL alone” treatments each time billed to her insurer as the destruction of 15 or more AK lesions. The March 12, 2012 treatment and chart were the basis for Counts VII and XV. Patient KS testified that she understood the IPL treatments as a follow-up to her prior surgery “to help with any spots” and a scar from the procedure. (Trial Tr. at 489, 497.) Years later, in 2014, Patient KS was treated with Solaraze gel - an indisputably proper method for destroying AK lesions. At various times, she also asked Dr. Memar about his Botox treatments, and he advised her against it.

         Finally, Patient AG testified that she went to Dr. Memar's office for cosmetic treatment of some redness and brown spots on her face. (Patient AG had a history of tanning and sunburns.) She was similar to Patient JJ in that Dr. Robinson independently examined her face on several occasions interspersed between dates on which she went to Dr. Memar's office for IPL treatments. For example, after a year's worth of monthly IPL treatments at Dr. Memar's office, Patient AG saw Dr. Robinson, who examined her face and diagnosed no AK lesions. About four or five days after Patient AG had an IPL treatment in December 2010, Dr. Robinson again examined Patient AG's face and observed no AK lesions. On August 13, 2012 - four days before Patient AG received an IPL treatment at Dr. Memar's office for 15 AK lesions on her face - Dr. Robinson examined her face and diagnosed no AK lesions. Dr. Robinson did diagnose Patient AG with various skin conditions, but never AK lesions. All told, Patient AG received 37 “IPL alone” treatments from Dr. Memar's office, all of which he signified to insurance companies were done to destroy 15 or more AK lesions on her face. According to her testimony, Patient AG contemporaneously believed that insurance should not have been covering these IPL treatments because they were only helping her cosmetically. She ceased getting IPL treatments from Dr. Memar once she found out that Blue Cross Blue Shield would no longer cover them and that she would have to pay $300 for each future treatment. Patient AG was 39 years old when Dr. Memar first wrote into her charts in December 2007 that she had 15 or more AK lesions on her face and prescribed a series of IPL treatments, and she received 14 such treatments after August 2010 - the last time Dr. Memar examined her. The June 2012 treatment and chart underlie Counts VIII and XVI.

         The Government called as an expert Dr. Edward Ross, a dermatologist who practices in San Diego, California. He opined that AK is a common condition that presents as red, scaly lesions on the skin and that he typically diagnoses the condition by touch and with the naked eye. In his decades of practicing in sunny San Diego, Dr. Ross has never seen a patient in his or her 30s or younger with 15 or more AK lesions at once, other than patients afflicted by a rare genetic condition for whom any sun exposure at all is extremely dangerous. Dr. Ross testified that he only uses “IPL alone” for cosmetic purposes because the treatment only makes spots appear better cosmetically by suppressing the redness (rather than, for example, destroying the underlying AK lesion). The Government also called Dr. Robinson, the dermatologist who saw Patients JJ and AG during periods in which they received IPL treatments that Dr. Memar billed to their insurers as the destruction of 15 or more AK lesions. She testified that PDT with Levulan would work to treat AK lesions but that she does not use “simple laser treatments, ” such as IPL alone, on AK lesions. Agreeing with Dr. Ross, Dr. Robinson did acknowledge that no standard of care expressly prohibits treatment of AK lesions with IPL alone.

         The Government also called to the stand FBI Special Agent Ashley Davis, who interviewed Dr. Memar in 2015 incident to execution of a search warrant at the Institute. She testified that she took notes during this interview and recounted several of Dr. Memar's statements to her. For example, Dr. Memar told her that he always informed a patient if they had AK either by saying, “You have actinic keratosis, ” or “You have a condition that has the potential to become cancer in 10 to 15 percent of cases.” (Trial Tr. at 647-48, 657-58.) Additionally, he “immediately responded ‘17004'” when Ms. Davis asked him “what he billed for an IPL.” (Id. at 652-53.) He became defensive when Ms. Davis told him that she had interviewed many of the IPL patients for whom he had submitted claims to insurers under the 17004 code, that they reported seeing him for treatment of either acne or melisma, and that they were never told they had AK or precancerous lesions. (Id. at 649, 658-59.) Finally, Dr. Memar told Ms. Davis that he gives his AK patients “a choice in terms of the treatment method that they wanted to pursue” rather than exclusively proposing IPL alone. (Id. at 660.)

         Finally, the Government called three of Dr. Memar's former medical assistants who testified that they performed IPL treatments on patients. All three testified that Dr. Memar instructed them for such patients to copy his initial diagnoses and diagrams verbatim into the charts for each of their IPL visits. Michelle Kline testified that she would record the presence of 15 or more scaly plaques even if she did not observe them “[b]ecause that was what was told us to write.” (Trial Tr. at 215.) She also confirmed that, when patients asked for “rejuvenation and anti-aging or something to improve the tone and texture of their skin, ” Dr. Memar touted the benefits of IPL treatments. (Id. at 197.) Although she could not recall specific patients or the condition of their skin, Ms. Kline believed that the IPL treatments she was administering at Dr. Memar's behest were cosmetic procedures. She further stated that, while Dr. Memar did tell certain patients that they had AK or precancerous lesions, he never recommended just IPL treatments for those people. The testimony of Dr. Memar's second former medical assistant, Jennifer Gecas, was substantially in accord; in fact, Ms. Gecas testified that she was stressed out about integrity issues at Dr. Memar's office. The third former employee, Christina Gutierrez, confirmed that Dr. Memar's medical assistants simply copied his initial diagnosis and diagrams when a patient came in for IPL treatments but also testified that she never treated a patient whom she believed did not have AK lesions, that she worked for Dr. Memar for 14 years, and that she did not believe that he was engaged in any wrongdoing. Ms. Gutierrez also recalled treating Patient AG and the presence of numerous AK lesions on her face. On cross-examination, Ms. Gutierrez admitted to maintaining a current business relationship with Dr. Memar's practice.

         In January 2013, Dr. Memar met with individuals at Blue Cross regarding the insurance company's audit of his billing practices for Patient KS. During the meeting, Blue Cross's medical director said that she had reviewed Dr. Memar's records regarding Patient KS and believed that his use of IPL on her was cosmetic. An individual present during the meeting testified that Dr. Memar justified his use of IPL as preventative with respect to Patient KS because she had a history of cancer. He never offered that he had destroyed precancerous lesions on Patient KS. For approximately six years prior to this meeting, Dr. Memar had successfully billed Blue Cross using the 17004 code as many as 48 times per month and never fewer than 10 times per month. In December 2012, he had submitted 30 such successful claims. Following this meeting, Dr. Memar was only paid for three, one, one, and four 17004 claims for February, March, April, and May of 2013, respectively. Similarly, Dr. Memar's diagnoses of AK seemed to plummet after this meeting. For example, Dr. Memar's charts for Patient PK indicate a diagnosis of “AK's x 25 face” or “AK's x 15 - face” on each of her 24 visits to his office between November 2008 through January 2013. However, for each of her eight visits to his office subsequent to January 2013, no diagnosis of AK lesions was recorded in her patient files.

         The defense, on the other hand, called eight different patients as witnesses. These eight witnesses were generally much older than the eight patients referenced in the indictment and had serious skin conditions, including biopsy-confirmed AK lesions. They generally recalled having scaly red skin patches that had been diagnosed as AK lesions and were familiar with actinic keratosis based on their discussions with Dr. Memar. Although all had at times received “IPL alone” treatments from Dr. Memar's office, they also had their AK lesions destroyed with other methods such as topical creams and PDT.

         The defense also called Dr. David Goldberg as an expert. He testified that, while he does not use IPL alone clinically on AK patients, he has used it to treat his wife's AK lesions and thinks it efficacious for that purpose. He claimed that the costs of utilizing IPL alone as a standard clinical treatment for AK lesions can be prohibitive. Dr. Goldberg also opined that, in an absolute sense, the number of AK patients Dr. Memar saw between 2007 and 2013 was lower than expected based on the number of patients with skin cancer he saw during that time.

         Although Dr. Goldberg never himself studied or published an article about the efficacy of IPL alone in treating AK lesions, the defense on direct examination asked him to interpret several academic articles claimed to support the use of IPL alone on AK lesions. The first of these was a 2006 split-face study by Gold et al. that, while never recommending use of IPL alone to treat or destroy AK lesions, found unexpectedly that they responded to IPL alone in approximately 50 percent of patients (whereas PDT was effective for approximately 60 percent of patients). In a rebuttal article, Dr. Ross took issue with several methodological flaws of the 2006 study, warning practitioners that they should not extrapolate from the Gold study that treating AK patients with IPL alone is viable: “[M]any of the actinic keratosis look better, ” but “within the context of short contact PDT, its role as the standard of care remains unsullied.” (Trial Tr. at 918-19.) This was generally consistent with Dr. Ross's trial testimony, although he noted that no recognized standard of care forbids use of IPL alone on AK lesions. Next shown to Dr. Goldberg was a May 2008 article that also reported a reasonably close approximation between AK results achieved with IPL alone and with PDT. Then Dr. Goldberg was directed to a 2011 article, which noted that “IPL can be effective and safe for the treatment of non-aesthetic facial and neck vascular lesions, ” a broad term that in Dr. Goldberg's opinion encapsulates AK lesions. (Id. at 924-25.) However, that study noted that “IPL used for actinic keratosis is not the best tool for treating these lesions as it improves erythema but not epidermal dysplasia” - effectively confirming what Dr. Ross said in his rebuttal article and trial testimony. This piece went on to describe IPL alone as a possible alternative to traditional treatment for “patients who have numerous large superficial actinic keratosis or patients who are not eligible for surgery due to their age, health condition (heart patients, pacemaker users), or anticoagulant therapies.” (Id. at 925-27.) Finally, Dr. Goldberg testified concerning a 2014 article that, as relevant, reported: “[W]hen used as an activator [as in PDT], IPL is a reasonable treatment option.” (Id. at 929-30.) It said nothing about use of IPL alone on AK patients.

         On cross-examination, the Government brought an article published in 2011 to Dr. Goldberg's attention. It summarized the results of a study comparing a group of AK patients who underwent PDT with a control group ...

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